ORDER
S.L. Peeran, Member (J)
1. All these stay applications and appeals raise a common question of law and facts with regard to denial of benefit of Notifications which are in operation for the Cement Plant. Appellants were also charged for having suppressed certain material information to the Department of Industries and obtained installed capacity certificates fraudulently. They were also charged that in view of such a mala fide action on their part, they are ineligible to the concessions of the Excise Duties under the Central Excise Notification for the period April 1994 to April 1999 and therefore on the basis of the statements recorded by the department from various persons, the show cause notice was issued invoking larger period demanding duties and also calling upon the appellants to show cause as to why penalty should not be imposed on them.
2. Appellants at the outset pointed out that department had not given the material facts leading to suppression to enable them to reply to the show cause notice. They requested the authorities to spell out as to in what form and in what manner, the appellants had suppressed the information to the Department of Industries and as to how they had obtained the installed capacity certificates fraudulently. However, despite the appellants’ repeated pleas, even during the personal hearing, the crucial document viz. the report of NCCB on assessment of installed capacity was not furnished to the appellants. However, the Commissioner has relied on this very document to give a finding in para-12 against the appellants which is challenged before us. However, the challenge is made on the basis that Commissioner has proceeded on the basis of kiln capacity while the conditions of the notification were with regard to cement plant capacity. In this regard, they contend that they have produced enormous evidence including the well settled Tribunal judgments. However, the Commissioner has neither recorded the same in his order nor given a finding on the judgments which are directly in their favour. The judgments referred to are:
(1) CCE v. Upper India Couper Paper Mills Co. Ltd. 1991 (51) ELT47 (T)
(2) Aauranghabad Paper Mills Ltd. v. CCE
(3) CCE v. Agrashakti Paper Mills Ltd. 1995 (59) ECR 72 (T)
(4) 6.7. Paper Mills v. CCE 1999 (35) RLT 681 (T)
(5) Dalmia Cements (Bharat) Ltd. v. CCE 1997 (73) ECR 168 (T)
3. It was pointed out by the appellants that initially the party had taken the stand that kiln capacity should be taken into consideration. However, the department was of the view that it is the cement plant capacity which is material for the purpose of grant of benefit of notification during the relevant period. This view was upheld in the case of Dalmia Cements (Bharat) Ltd. v. CCE 1997 (73) ECR 168 (T). In this regard, this very same Bench has taken the view in para 4 of the citation as follows:
4. We have considered the pleas made by both the sides. We observe that the issue relates to the interpretation of the wordings of Notification 172/89. We observe that the appellants are manufacturers of cement and it is for the manufacture of cement that they had their capacity licensed and they got the enhancement of this capacity when they further went before the authorities. The capacity as is certified in terms of Industries (Development and Regulation) Act, 1951 is in respect of the commodity which is covered under this Act. The appellants as mentioned had gone before the authorities for sanction of the capacity for cement alone. It has not been shown to us that there exists separate mechanism for sanction of licensing capacity of kiln as has been urged before us for the purpose of notifications. The legislative history of the notification also shows that all along benefit of notification has been given taking into consideration the licensed capacity of a factory for products for which it has received sanction under the Industries (Development and Regulation) Act, 1951. In the notification in question i.e. Notification 172/89, in the opening para after setting out the commodity which will be eligible for the benefit of the exemption, it is stated “and manufactured in a factory” followed by Condition (a) wherein it is stated “using vertical shaft kiln with a licensed capacity not exceeding 200 T per day The words as they are set out only lead to the interpretation that the factory for the purpose of notification should have a capacity not exceeding 200 mt and the goods produced in such a factory are by using vertical shaft kiln. The licensed capacity not exceeding 200 tonnes is to be read with the factory and not the kiln. The appellants seek the reading of the notification in a manner that it is the kiln capacity which is relevant and not the capacity of the factory. We observe that the words ‘licensed capacity’ have been very significantly used in the notification and this licensed capacity as discussed in the earlier paragraphs is only w(sic) respect to the capacity of the factory to produce a particular commodity for which the Government of India has accorded sanction under the Industries (Development and Regulation) Act, 1951. No provision has been shown to us nor any mechanism has been shown to be there for certifying the licensed capacity of a kiln under any provisions of law or any rules framed under any law for the purpose. The predecessor notifications also point out to only one thing, that is for purpose of concession the parameters to be taken into consideration is the capacity of the factory to produce a particular product. The benefit as could be read from the parameters laid down is intended for smaller units having limited capacity per day based on the type of kiln that is used. In the above view of the matter we are of the view that the learned lower authority has rightly interpreted the notification to hold that inasmuch as the appellants have production capacity of cement more than 200 tonnes per day they would not be eligible to the benefit of notification. We therefore dismiss the appeal.
4. It has been pointed out by the appellants that the Commissioner has erred seriously on the following points:
(a) There is violation of principles of natural justice in as much as that the Commissioner has not given the report of NCCB on which he has given the findings in para 12 of his order. Appellants have stated that, that particular portion of the finding is violative of principles of natural justice and the order is required to be set aside on that ground alone.
(b) It is pointed out that the Commissioner in para-II has relied upon on the expert opinion which expert opinion was also not supplied to the appellants. Further, the said expert opinion is on the kiln capacity and not on the installed capacity of the cement plant. It is pointed out that therefore the findings arrived at in
para-II is not only violative of principles of natural justice but is against the ratio of the judgments of the Tribunal which have already been cited supra.
(c) It was pointed out that licencing authorities had examined the entire plant by physical verification and on the basis of supplier’s certificates, certificate of installed capacity of the plant was issued.
(d) This certificate has not been cancelled till date and therefore the Commissioner cannot go beyond the certificate which is in force in terms of the following judgments:
–Bombay Chemicals Pvt. Ltd. v. UOI.
1994 (69) ELT (Mad.)–Titan Watches Ltd. v. UOI
1991 (51) ELT 47 (T)–CCE v. Upper India Couper Paper Mills Co. Ltd.
–Gem Electro Mechanical Pvt. Ltd. v. CC, Calcutta.
(e) It is contended that the Commissioner in the findings in para 11 to 32 has based his finding in contra to his findings on record and the citations dealing with this issue which is well settled. Appellants have assailed the approach of the Commissioner in deciding the matter on the basis of statement taken from the Addl. Director of Industries, Shri M. Raja Reddy before issue of SCN. The said Raja Reddy in his statement had informed the investigating authorities that appellants had suppressed the vital information and as a result they were misled to give the certificate. The Commissioner has proceeded solely on this basis to give the finding without having referred the matter to the authority for re-examination of the case in the light of the statement and issue of cancellation certificate. Appellants are aggrieved on this count and state that the order is bad in law as it violates the principles of natural justice.
(f) It is contended that the Ministry had issued guidelines with regard to manner in which the cement capacity is required to be assessed and taken into consideration. Appellants had given these guidelines and brought to the notice of the Commissioner. However, the Commissioner has not looked into the same nor he has referred to in his order and thus the order is not a speaking order on this count as well.
(g) It is further contended that the Govt. of Andhra Pradesh had constituted a High Powered Committee in view of the allegations brought out by the Excise department about the fraudulent obtaining the licence, the reason being that the certificate is a basis for grant of five other capacities of the cement plant namely (i) lime stone crusher (ii) wagon element (iii) coal linkage (iv) electricity (v) water. The interest of the State Govt. being directly involved, and the said certificate wrongly issued or fraudulently issued would affect the State’s interest, therefore, this High Power Committee was constituted. It has been brought on record and the copy of High Power Committee is produced to show that appellants had correctly obtained the certificates and the installed capacity was in terms of notifications during the relevant period. It is contended that the Commissioner has disregarded this three Member Committee’s report in para 32 which is not justified and it vitiates the order. It is pleaded that this is a vital piece of evidence and it cannot be rejected on the count that it has not been issued by the competent authority under the notifications. The findings are persuasive in nature and it deals with the issue in so far as the cement installed capacity is concerned. This expert committee’s report has not been rebutted by countering evidence either through their Asst. Commissioner who is now presently the authority under the notification nor they have got the certificate, issued by the earlier authority, cancelled.
(h) It is further pleaded that even the supplier had certified and issued certificates with regard to installed capacity of the cement plant being within the parameters of the notification. It is stated that the Commissioner has also not looked into this point. Thus, on all the points the order is not a speaking order which violates the basis and fundamental principles of natural justice calling for remand of the order.
5. On the behalf of M/s. Deccan Cements Ltd., the arguments were advanced by the Senior Advocate Shri P. Arvind Datar, assisted by his Junior Shri C. Saravanan and Shri N. Venkatraman, Advocate alongwith Shri A. Vijayaraghavan, Advocate argued for M/s. NCL Industries Ltd. They have taken us through the entire records, evidence, show cause notice and replies and the order of the Tribunal besides the order of the Commissioner to point out that cancellation of installed capacity order is against the principles of natural justice. Even the findings recorded on the time bar and on penalty is not sustainable. They point out that they had given all the details of the plant as can be seen from the application filed by them on annexures thereto to the licencing authorities. Therefore, there was no suppression and larger period was not invokable. They point out that there were four show cause notices earlier issued and matter had been adjudicated in some cases and proceedings dropped, and in some cases, the matter is still pending. As the matter which was dropped by not adjudicating before the appellate forum, the issue is settled and the department could not reopen it afresh. It is also pleaded that there cannot be suppression when the department had full knowledge of all the material facts on the basis of previous proceedings.
6. The Ld. Senior Counsel Shri A.P. Datar relies on the judgment rendered in their own case in which Revenue was aggrieved and had come up before the Tribunal as in the case of CCE, Hyderabad-Ill v. Deccan Cements Ltd. 2001 (44) RLT 769 wherein the department was aggrieved with the grant of benefit of notification to them. The Tribunal in the case of appellant’s own case had dismissed the Revenue appeal by recording in para 5 & 6 as follows:
5. We have heard learned Shri S. Kannan, learned DR for the department and Shri P. Datar, Learned Counsel alongwith Shri J. Sankararaman, Learned Counsel for the respondents and considered the submissions and after considering the submissions we find that–
(a) the issue involved is eligibility of Notification No. 154/90 dated 1.11.1990. This notification exempts cement “manufactured in a factory of the description specified in column (2) of the Table hereto annexed”. The appellants admittedly qualify as a factory described at Serial No. 4 column (2) of this table. The explanatory note below this notification, reads as–
this notification seeks to supersede Notification 23/89-Central Excise so as to provide installed capacity limits for units not required to obtain an industrial licence and convert the daily capacity limits into annual capacity limits.
We find that there is a standing order (Tech.) No. 61/91 dated 6.5.1991 issued by office of the Collector of Central Excise, Hyderabad wherein eligibility under Notification No. 23/89-CE dated 1.3.89 and 134/90-CE dt. 1.11.90 has been clarified in the following notes–
Please refer to this Office Letters C. No. IV/16/274/90-MP-l dated 13.3.91 and 15.4.91 wherein instructions were issued that the assessments in respect of Cement produced in Mini Cement plants in excess of the permissible quota of 25% over and above the installed capacity of 6600 tonnes or 99000 tonnes per year, as the case may be, should be assessed to duty provisionally till receipt of clarification from the Board.
Board has since clarified that the issue has been examined in depth and it is viewed that the benefit of exemption as contained in Notification No. 23/89-CE dated 1.3.89 as amended is available to Cement manufactured in a factory satisfying the description of the factory stipulated in the Notification.Therefore, the benefit as contained in the said Notification could be available irrespective of the quantity of cement produced.
In the light of Board’s clarification the instruction is issued under this Office Letters C. No. IV/16/274/90 MP-1 dated 13.3.91 and 15.4.91 may be treated as withdrawn.
(Emphasis supplied)
(b) the appellants are a manufacturer of cement and were availing the benefit of Notification No. 23/89-CE dated 1.3.89 and other notifications prior to the impugned notification and were issued a Show Cause Notice dated 28.1,91, wherein the issue was license capacity and eligibility Notification No. 23/89 as amended. This was made answerable to Assistant Collector of Central Excise, Hyderabad which was found to be finally not sustainable by Commissioner (Appeals). Another Show Cause Notice was also issued on 28.9.90 on the eligibility of the same manufacturer assessee under Notification No. 23/89-CE dated 1.3.89 read with Notification No. 172/89 dt. 1.9.89 and CL file effective from 1.8.89 on the very same issue the Collector ordered the withdrawal of the proceedings vide his order dated 8.7.91 relying on the standing order (Tech) No. 61/91 dated 6.6.91 (supra). Thus the issue was well within the knowledge of the department and nothing that was required to be declared was kept away from the department.
(c) since Standing Order (Tech) No. 61/91 dt. 6.6.91 of the Collectorate has not been proved to be withdrawn and is based on clarifications, wherein the Board after examining the issue in depth has held that the benefit, as contained in the said notification could be available irrespective of quantity of cement produced. This standing order, a clarification on the issue, for the exemption under Notification No. 23/89-CE dt. 1.3.89 as amended would, in our view, be applicable to the Notification No. 154/90, which as per the explanatory notes given therein, indicates the same to be issued only to supersede Notification No. 23/89-CE dt. 1.3.89. Therefore, we do not find any material, in the present appeal to upset the findings of the adjudicating authority, that the present proceeding are barred by limitation. We would also find that the Revenue cannot argue against their own interpretations for the eligibility of the notification as amended. The interpretation given by the Board, that ‘the benefit of the notification is available irrespective of quantity of cement’, with the stipulation in the notification of the eligibility of the factory to avail the said exemption, as given for manufacturer in column (2) would settie the issue. There is no material to come to a conclusion that the assessee factory, in the present case is not one of the manufacturers as made eligible in column (2) of the said notification. We find that there is no cause made out even in merits.
(d) In view of the fact that no demand can be determined and also the demands are barred by limitations, we cannot find any reason revoking in penalty of manufacturer and the Managing Director.
6. In view of our findings, the appeal is dismissed.
7. Therefore, they submit that the issue is no longer res integra and the Commissioner ought to have dropped the proceedings in the light of their submissions and as appellants have got a strong prima facie case, they plead that waiver of pre- deposit of duties and penalties be granted and appeals taken up and remanded back for de novo consideration or in the alternative a date be fixed and appeals be allowed as the issue is totally covered. Appellants’ Counsel submits that they want to be fair to the Revenue and in the interest of Revenue they have no objection for remand although they contend that the issue is settled and covered and that appeals are required to be allowed.
8. Revenue is represented by the Ld. Additional Central Govt. Standing Counsel Shri R. Veeraraghavan. On a specific query from the Bench, with regard to the points raised by Ld. Counsels that the investigating authorities have proceeded on the basis of report obtained from Shri Reddy who is the Addl. Director of Industries, Hyderabad who in his statement categorically stated that appellants had suppressed the material facts and obtained the certificate. Thus, it is submitted that, the fraud is clearly established in terms of his statement. They were given an opportunity to cross examine and appellants’ contention that there is violation of principles of natural justice is not justified and a correct submission. So long as there is a statement of the competent authority, and he has been cross examined, then the burden of the Revenue is established and discharged. It is in keeping with the lines of the Tribunal judgment in CCE v. Upper India Couper Paper Mills Co. Ltd. 1991 (51) ELT 47 wherein the Tribunal had held when there is any material evidence collected by the investigating authorities, then the same should be put to the competent authority and opinions obtained from them. As they have already taken the statement from Mr. Reddy who has been cross examined, the Ld. ACGS Counsel submits that said ratio of the judgment cited supra applies to this case.
9. On a specific query from the Bench, with regard to the findings recorded in para-12 on the non-supply of report of NCCB. Ld. ACGS Counsel submits that even if this paragraph and this evidence is not taken into consideration, even then the order will stand on its own on the basis of detailed findings recorded by the Commissioner and the various judgments cited by him. On being specifically put a query with regard to cement capacity which is required to be taken and not kiln capacity, Ld. ACGS Counsel submits that it is a fact that the Tribunal has laid down the ratio that cement installed capacity is required to be taken but even on the basis of cement capacity, the appellants have exceeded their capacity as per the evidence collected by the investigating authority and the Commissioner has clearly recorded and given finding in para-11 onwards and therefore no fault can be made out by the appellants. The judgments which were cited to support that kiln capacity have proceeded only on the basis of cement capacity as in para-11 & 12. The Commissioner has given a clear finding that cement capacity had exceeded from the capacity mentioned in the notification. Therefore, larger period is correctly invoked and demands correctly confirmed and penalties are rightly imposed. On a further specific query as to what the Ld. ACGS Counsel has to say about the previous proceedings and about appellants’ say that the department had full knowledge about it, the Ld. ACGS Counsel relied on the findings given by the Commissioner on the time bar and has clearly distinguished the previous proceedings and relied on large number of judgments, therefore submitted that the Revenue’s interest would be served, if appellants are put to terms and the matter is taken for regular hearing. On a specific query, with regard to certain evidences which have not been given and as to whether it does not violate the principles of natural justice, on this point, Ld. ACGS Counsel does not wish to contest and clearly states that where the evidence is relied, copy of the evidence is required to be given, non-supply of evidence would lead to violation of principles of natural justice. However, it is his contention that even after disregarding the certificate of NCCB, the order can stand on its own legs. With regard to the findings on Three Member committee which was rejected, the Ld. ACGS Counsel submits that the Commissioner has given a finding that they are not competent authority and their findings are not binding on the Commissioner as held by him in para 32 of his order. Hence, the Ld. ACGS seeks for dismissal of stay applications and appeals and confirmation of orders impugned.
10. On a careful consideration of the submissions made by both sides, and on perusal of the entire records of the case, we see lot of force in the submissions made by the Ld. Senior Advocate, Shri P. Aravind Datar, assisted by Shri C. Saravanan and Shri N. Venkatraman, assisted by Shri R. Vijayaraghavan on the following reasonings:
(1) The vital information which is in para 12 of the order i.e. the report of the NCCB has not been furnished to the appellants thereby, it violates the principles of natural justice. The Learned Additional Central Govt. Standing Counsel was of the view that the order of cancellation was only a formal order, however we are of the considered opinion that the entire findings pertaining to cement capacity also has also been based on this report. So the finding on the cement capacity is based on document which has not been served on the appellants and therefore the order becomes unsustainable on this count.
(2) We also notice that the Commissioner has proceeded on the basis of kiln capacity and spelt out in para 12 that kiln capacity is installed in the cement plant. This is totally against the rulings laid down by the Tribunafwhich is also extracted supra, thereby the findings rendered in para-19 becomes negatory and is required to be set aside. As regards the findings given by the Commissioner on non-acceptability of the Three Member Committee’s report, we are of the considered opinion that this Commitee was constituted by the State Government, who are the authority also for issue of certificate under the notification. The basis for appointing this Committee was the allegation brought by the department with regard to obtaining the certificate fraudulently. The Three Member Committee had gone into in great detail and has found that the installed capacity was within the limit of the notification. Therefore, the Committee’s report cannot be rejected on the plea that they are not competent authority under the notification. What is required to be investigated and found is as to whether the appellants were within the ambit of the notification? On this point, Revenue is strongly relying on the statement of Shri Raja Reddy. This is only a portion of the evidence which cannot be considered as conclusive in nature, the reason being that the initial statement given by Shri Reddy was cross examined and in the cross examination, the answers have been in favour of the appellants. Therefore, Revenue in order to establish their case, ought to have asked Shri Reddy or any competent authority under the notification to re-examine the issue and cancel the certificate which had been issued by the competent authorities.
(3) We have also examined the judgments on this issue wherein it has been held that once the certificate is issued by the Ministry of Industries, unless it is withdrawn, Revenue cannot enforce demands by denying the exemption. Mere statement of Reddy cannot be taken as a cancellation of the certificate issued during the relevant period. It has been brought to our notice that the department had initiated proceedings and had dropped the same. If this statement is taken into consideration, then it follows that department had full knowledge of the matter. The Commissioner ought to have applied his mind on this aspect of the matter and as there is no application of mind on this aspect of the matter, we are of the considered opinion that the order is vitiated.
(4) Further, we notice that appellants have relied on the supplier’s certificate to show that the installed capacity was within the ambit of the notification. This plea has not been properly appreciated and looked into. Further, at the time of obtaining the licence, appellants had given the details of machineries installed in their annexure to the declaration, which is exhibited before us. Each part of the machinery and its installed capacity, has been furnished. When this is the point in issue then the Commissioner ought to have addressed his findings as to how there is suppression in the matter. We notice that during this entire period the department had an occasion to visit and initiate proceedings. Nothing prevented the department to get the licence cancelled on physical verification from their experts, besides, establishing that there was a statement from Shri Reddy, Director, Commissionerate of Industries.
(5) We further find a fresh arguments raised by the appellants’ Counsels that the Ministry had issued various norms and had laid down the manner in which the installed capacity is required to be considered. Appellants had brought to the notice of the Commissioner this evidence
of circulars pertaining thereto. The Commissioner ought to have put the circulars to the Commissionerate of Industries and directed them to examine the issue in that light and give a categorically findings as to whether the installed capacity was within the terms of the notification. If it was not, then he should have requested them to cancel the certificates on the basis of statements of Reddy, who had stated that appellants had obtained certificate on the basis of fraudulent and misinformation. As this vital procedure has not been followed the impugned order is vitiated and requires to be set aside.
11. For the reasons, which we have recorded above, we are of the considered opinion that no further purpose would be served in keeping the appeals by granting full waiver and staying its recovery as ultimately the matter has to go back for de novo consideration instead of fixing up a date of hearing to hear the same arguments and appreciate the same evidence, we are of the considered opinion that the matter is required to be remanded at this stage itself, as it is in the Revenue interest. Otherwise, there will be long delay and that would prejudice to the case of the revenue.
12. In that view of the matter, we allow the stay applications by granting waiver of pre-deposit and stay of recovery and take up the appeals and remand the same to the Commissioner for de novo consideration with the following directions:
(a) The Commissioner should strictly follow the parameters, laid down by the Ministry of Industries In taking the installed capacity of the cement plant.
(b) The Commissioner shall furnish copy of the report of NCCB and call upon the appellants to file their report to the same.
(c) The Commissioner is at liberty to approach the competent authority for reexamining the issue and for cancellation of the certificate, as according to the investigating authority, the same was competent on the basis of misinformation and fraud.
(d) The Commissioner shall take into consideration the judgments which are already rendered on this issue, especially the judgments rendered in appellants’ own case.
(e) The plea that previous proceedings were dropped and the department had full knowledge of the installed capacity and as a result, the demands are barred by time is required to be re-appreciated.
(f) Further, the plea that no penalty is leviable should also be re-appreciated.
13. The Commissioner shall keep an open mind and re-adjudicate the matter in the light of our findings by observing the principles of natural justice and by granting full opportunity to appellants. Both sides are at liberty to produce evidence and rebuttal evidence to sustain the charge or to show that the appellants have not followed the notification.
14. Thus, the appeals are allowed by remand.